Christmas Budget: How to Make a Budget You Can Stick With

Don’t want to go broke this holiday season? This post will show you a simple way to make a Christmas budget that you will want to stick with.

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Christmas Spending

This is not going to be a typical Christmas, y’all. I don’t need to tell you that.

Whatever your typical Christmas season has looked like in the past, well, let’s scrap that for this year (and hopefully create new traditions.)

One thing we shouldn’t scrap in the holiday season is a Christmas budget.

None of us needs any more added stress this year. Don’t get into debt for Christmas (or further into debt).

Here we’ll go over an easy way to create a Christmas budget that works for you.

Also be sure to check out and save this post: 100 frugal Christmas ideas (free or practically free) – it’s full of great ideas!

What Is a Good Budget for Christmas?

A good Christmas budget will be one that works with you and your financial situation.

There is no specific dollar amount I can give you that would be appropriate for everybody.

If you are truly broke or on a path to spend less money a Christmas budget should fit with your current situation.

There is nothing wrong with agreeing to only buy used, or exchange DIY Christmas gifts this year, or everyone just choosing one person in the family to buy for. Spending on Christmas can get blown out of proportion, and it’s not the stuff that makes the memories.

What Is the Average Christmas Budget?

Now this is an easier question to answer.

The average American household spent $1,496 on Christmas in 2019 (source: Deloitte).

This average Christmas budget amount included gifts and cards, and also buying holiday clothing, entertaining, and going out.

Nobody has any idea of what the average Christmas budget 2020 will be in this pandemic year.

People might be buckling down and saving more money and spending less on Christmas. The Christmas budget for entertaining and going out would presumably be much lower, but Christmas spending might go in the other direction too. Feeling cooped up and missing family and the usual traditions, people might spend more on Christmas with gifts for others or themselves.

To spend less on Christmas gifts, check out these fun Dollar Store stocking stuffers for kids.

How to Create a Christmas Budget

The Christmas holiday is a great time to relax, celebrate, and catch up with your loved ones (as much as we can this year!)

But Christmas is also a time when today’s culture says that we should spend money on stuff, and lots of it!

Every year Christmas gets more and more expensive, we all assume that we have to let ourselves go and spend casually because it’s a thing to do. However, spending more than fits into our Christmas budget can lead to debt and stress. Christmas definitely is not meant for that.

So, if you want to kick-start a new year with positivity (pleeeease, let next year be better for all of us!) and stick to a Christmas budget, there are a few things you can do to make sure that actually happens.

Let’s take a closer look…

Be realistic with your Christmas budget and make a list

The first step is to figure out how much everything is going to cost you. If you have a huge family and lots of friends with whom you exchange gifts, then it could be harder to cap your Christmas budget at $100. But not impossible! See my ideas above.

Take your time and form a rough idea about how much you can realistically afford. Now, make a list of two things:

1. All the people that you want to buy a gift for (Family, co-workers, friends, or anyone else)

2. All the things that you want to do during Christmas (Parties, decorations, charity, etc.)

This is just an initial list. You can trim it later according to your plans.

Craft a zero-based Christmas budget

Now that you have a loose idea of how much you want to spend on Christmas, it’s time to create a zero-based Christmas budget.

But, before we dive right in, let’s go over what a zero-budget means.

A zero-based budget is this:

Your total income minus what goes out should be equal to zero dollars.

So, Income minus Expenses = Zero

For instance, let’s say your monthly income is $5,000. So, you want every single penny that you spend, invest, give, or save each month add up to that amount.

The key here is, you look at the numbers on the income side of the equation first, and then you make your expenses, savings, and investments work within the boundaries of your earnings.

You can do the same with your Christmas budget.

Say, if you figured out that you’re able to afford to spend $500 on Christmas this year, you need to set a budget for each expense and each person on your list in a way that it doesn’t exceed the limit that you’ve set.

We’ll make an easy example of a zero-based budget for Christmas spending.

Let’s assume we set a budget of $1,000 for Christmas and we want to buy gifts for 4 close family members, 4 extended family members, 2 neighbors, 4 co-workers and plan a small party.

An example of a zero-based Christmas budget

So in this case we could allocate the expenses in following way:

· $100 for each close family member = $400

· $50 for each extended family member = $200

· $25 for each co-worker = $100

· $25 for each neighbors = $50

· $250 for parties, decorations, foods etc. = $250

Total = $1000

Now, you’ll know exactly how much you’re going to spend on what and whom. If you spend less, that’s great, but it’s so easy to spend more. After all, Christmas is time to share and spend, it’s not about being frugal, right?

So, this takes us to the next step.

Make some cuts and account for extras in your budget

Yes, you created a zero-based budget for Christmas but this is just the starting point. It would be hard to spend exactly $25 on someone.

Christmas pulls on our purse strings and it’s not always easy to be frugal during the holidays. You might end up choosing gifts or food that’s a bit higher than you allocated, just because they look like a better option.

So, it’s always better to make some cuts in your budget to stay under the limit. It’s nice to give gifts to your kid’s teachers, the paperboy, the mailman, etc. or to have expensive lighting and decorations, but understand that it’s not necessary. To fit your budget, consider what cuts you can make.

Additionally, you might want to have room in your Christmas budget for extras like a small gift or a box of candy to keep on hand. This is just in case there is someone who pops up with an unexpected gift.

Set up your Christmas savings fund

You’ve determined the amount you want to stick to for holiday spending.

So now, you need to make sure that you have enough money when it’s time to do your Christmas shopping.

One way to do this is create a separate Christmas savings fund. Keep this fund open all year long, and put little money into it each month according to your preferences and what your income can afford.

In addition, here are tips that will teach you how to save money for Christmas (to help you not go broke this holiday season)

Try to shop for Christmas throughout the year. This will benefit you in two ways:

1. You’ll get the best deals on everything that you purchase.

2. When Christmas comes near, you’ll be able to sit around and enjoy holidays instead of stressing over shopping.

Stick to your Christmas budget

You’ve got your holiday spending mapped out.

The harder part might be sticking to your Christmas budget.

Leading up to Christmas, maybe you saved some extra money or you faced some problems along the way and were not able to save as much money for Christmas as you hoped. You can adjust your budget for Christmas to reflect this new reality, but try to stick with a budget. Your budget is the tool that will help you have a debt-free Christmas (it is possible!)

I know it’s not always easy to stick to any budget. But saving money and creating a budget for Christmas is an extremely rewarding thing. It will give you the freedom to spend money without worries during the holly jolly Christmas.

Related reading: The Best Holiday Money Saving Tips for Halloween, Thanksgiving, and Christmas

Christmas Budget Planner

My Minimalist Budget Binder includes a Christmas budget worksheet – it’s all done for you! It’s so simple to fill out and will get your budget for Christmas all set up! You can grab the budget binder here and get planning your debt-free Christmas this year:

Budget Friendly Gifts for Christmas

For frugal Christmas gift ideas that people will LOVE to receive, check out these posts:

Final thoughts on creating a Christmas budget

Consider doing Christmas differently this year. Start with making a list then plan out a zero-based budget, make the necessary changes, set up a dedicated fund, and stick to your plans.

If you follow a Christmas budget that fits you, you can finally enjoy a Christmas holiday without the worry of hefty credit card bills. You’ll start a new year with a positive feeling that you created an amazing holiday and didn’t go into debt doing it.

How are you planning to save during this Christmas season? Drop a comment; I’d love to read it!

If you happen to be traveling for the holidays this year here are 10 tips for flying on Christmas Day (or around Christmas)

And if you want to teach your kids how to budget (nope, it’s not too early to start!) check out this post on budgeting for kids for tips!

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